About This Episode: 

In this episode of The Agency Profit Podcast, we’re joined by the CEO of Hawke Media, Erik Huberman. Discover how Erik built one the fastest growing marketing company in the world that has reached a valuation of $80 million in under 6 years. We break down the challenges he’s faced growing so quickly, increasing your agency’s value, understanding profit, gross margin and more.

About Erik: 

Erik Huberman is the Founder & CEO of Hawke Media, a full-service Outsourced CMO based in Santa Monica, CA that launched in 2014 and has been valued at $80 million. In just 5 years, Hawke Media has grown from 7 to over 120 employees and has serviced 400+ brands including Raden, BeautyCon, The Ridge Wallet, Buscemi, Red Bull, Evite, Verizon Wireless, HP. 

Want to See More of Erik? Follow him online:

Time Stamps:

Useful insights and questions from this episode:

Introduction 0:00

Who is Erik Huberman? 2:12

Starting Hawke Media 3:01

Challenges in Growing an Agency 4:17

How Important is Understanding

the Cash Flow of Your Agency 8:05

Figuring Out Your Business Goals 10:43

How to Increase the Value of Your Agency 12:23

How to Know the Right Time to 

Offer More Services to Your Clients 16:38

Process of Adding New Services to the Agency 18:06

How to Manage Employee’s Capacity 19:24

Ensuring Your Team’s Well-Being 21:27

Different Tools and Systems to Ensure 

the Performance of Your Business 23:02

Convenient Automated Profitability Software 24:29

What are the Important Core Metrics in an Agency 26:12

Advice to Start-Up Agency Owners 28:14

Blog: 

Hawke Media is one of the Top 20 Most Promising Digital Marketing Solution Providers in 2017 and was named at the Top Inc 5,000 fastest growing companies in 2017 as well. Hawke Media has worked with over 400+ brands including Evite, Red Bull, Verizon, HP. 

Today, Hawke Media continuously provides exceptional marketing services to the business owner along with their team of top tier experts that helps the different aspects of a business.

Erik began consulting and advising and it was organic when he started an agency. He first sought out help, hired people, until it grew into an agency with over 170 people and is continuously growing up to this day. Understanding a niche that is completely under-served and needed help drove Erik into building the agency that is now Hawke Media.

Despite being offered to sell the company quite a few times, Erik liked the idea of continuing. He loves the idea of working with different companies, helping entrepreneurs, and most importantly he is truly passionate about what he does. 

What are the Challenges in Growing an Agency? 

It’s not always smooth sailing when it comes to running an agency. And, according to Erik, here are the challenges he faced while growing his company:

  • People are volatile and emotional. People have different personalities, wants, goals, and needs. 
  • Even though their payroll is similar to their monthly revenue five years ago, there are times where they get thin on cash wherein it took a while to catch up with the revenue to make money for the team.

He also shared a challenging experience when they had a $400,000 payroll and $800,000 for a month while having only $13,000 in the bank. Entrepreneurs also said that it could happen again so he better get ready for his business. 

“That is very rare that you when you’re growing a business like this and you don’t have a ton of outside funding and you’re not publicly traded, you’ll have so much cash that you’re never gonna get thin.”

Erik added, “Don’t just let your money sit on the bank, invest it.” 

How Important is Understanding the Cash Flow of Your Agency

The very first model Erik used to start his business was paying the flat base salary then giving 30% of what they get paid by the clients.

On the next batch of talented individuals he hired, Erik said that they followed the same payroll model of which they give 30% of what they made in addition to their agreed flat rate. Erik found out that his employees are reactive. 

Erik added that they also looked at their amount of expenses on their first year to see how much they spent on overhead, advertisements, payroll, etc. He had a profit of 40% in the first year and from then, he knew it wasn’t sustainable. And, from the data which they have gathered, Erik and his team decided to change their business model, and see which works best for them.

Figuring Our Your Business Goals

The team experienced hitting their benchmark early so they had to find ways to maintain it. Erik’s original plan was to get into 10 million in revenue. He didn’t have a grandiose plan and now he has a multinational, multibillion-dollar company plan.

According to Erik, “I had a very clear path to 10 million, very clear what was going to take. In my head. We’re going to do it. It’s going to take four years. And that’s what happened. And then two years, almost two years ago, we hit it.”

It is really important to be objective, innovative, and realistic when you’re still figuring out your goals for your business. It’s not enough to conceptualize, and you have to actually put your time and effort into it. 

How to Increase the Value of Your Agency

Luckily, Erik is married to a person who is in private equity. His partner gives him constructive advice on how he can make his business more profitable.  Now, here are the ways on how to increase the value of your agency according to Erik Huberman:

1. Long Term Contracts

Long term contracts value consistency and reliability. And, it is a must that the moment you sign an agreement you are fully aware of what you’re getting yourself into. Make sure that you create appealing contracts for your stakeholders which you both can benefit from. 

Having long term contracts with your clients not only guarantees profits but it is also a gateway to meeting and attracting more clients and investors. 

2. Client Concentration

It is important that you have multiple revenue sources, meaning you have a good amount of investors who are taking a chance on your product or you have multiple businesses where you earn profits from. And, as the saying goes, “Do not put all the eggs in one basket.”’

3. Recurring Revenue

Recurring revenue shows how much investors or consumers are sticking around your business model and of course, the business’s capacity to be profitable.

4. Profitability and Gross Margin

These are both massive and important. These factors, play-in with profitability too. Everybody knows that if you run an agency and you own the whole entity. 

There are a lot of expenses that aren’t necessarily needed but somehow, they are essential to keep your agency up and running. Erik also stated that profitability and growth rate are the kind of equation that you need to see and carefully analyze. Erik said that in order to consider a business profitable, it needs to have at least a 40% increase in profit. 

How to Know the Right Time to Offer More Services to Your Clients

The person running an agency needs to understand how to build a brand in their business. Thus, he or she must also understand what his or her client needs.

1. Know the Clients Needs

The reason why Hawke Media is on top of their game because they truly understand what their clients need. However, before they venture into new services and offerings, they carefully analyze the risk of the said venture while making sure that their level of profitability is at least at a 40% margin. 

And of course, they also need to know how much or how little they’re going to charge in their new services to make sure that it will be profitable. 

2. Take Risks

“We’ll take some risk.” Says Erik. “It doesn’t have to be perfect at the beginning of the scale. It is what you have to get better at to achieve perfection on those margins. And that’s how we build it out. So it’s finding that expert which we can build a team around finding someone that’s amazing in that field.”

As an agency owner. You must know when and how to take risks. And, make sure that you are doing it the “smarter” way. Hiring and finding the right people is very essential, but never forget to learn, teach, and adapt to new trends and techniques that are essential to improve your business and profitability. This way your employees will be more efficient.

How to Manage Employee’s Capacity 

Now, Erik’s team has four full-time recruiters so they always have people on deck. They’re constantly interviewing and ready to hire whether they have to replace people or bring in people as quickly as possible. They also have a full-training onboarding system that they’ve built so people can ramp up pretty quickly.

According to Erik, it is important to establish your team’s and the individual’s strength and weaknesses. Through this process, you will be able to determine:

  • Who you are going to hire?
  • When do you need to hire?
  • When do you need to train them?
  • Who can take-up more tasks/roles?

Ensuring Your Team’s Well-Being 

One of the things that we agree on is making sure you are not burning your team. Erik ensures that his agency is a fun place to work.

“People feel very at home here, which is super fun and that’s what we want. I think that’s part of the culture.”

“If we want this to be a place people want to work and we want this to be a place that my partner calls it as “people want to be from” where it’s like if Hawke Media is on a rabid resumé, you’re known as a badass and that’s something we felt we get.” He added.

Different Tools and Systems to Ensure the Performance of Your Business

Erik uses real-time reporting on all his business matters. They built their own ERP system that pulls everything from their CRM to their project management, to their timesheets. They don’t charge for the time but they track time allocation on QuickBooks to their client data where they can log in. These will consistently create processes around the time when they are not retaining clients and clients who are performing well.

Convenient Automated Profitability Software 

Everyone who owns an agency knows that it is difficult to keep track of their agency’s profitability, growth, risks, losses, and even productivity. Granted that some of our data are spread out on different tools, files, and platforms, and it’s almost impossible to keep track. This is why I started Parakeeto, to makes transactions within agencies in just one place. 

What are the Important Core Metrics in an Agency

The important core metrics are sales and marketing. Even lead generation. On the services side, it’s retaining clients, it’s upselling their growth that they are getting as well as what they are returning. Erik keeps it simple as possible within his five departments:

  • Sales – New monthly recurrent business.
  • Marketing – New leads.
  • Accounting and Finance – Keeping track of growth and profitability.
  • H.R. – Employee retention and sentiment.

Erik said that his job is to visualize and predict the things that the company is lacking which hinders it from being profitable and whether they’re leaders of innovation of not.

The second part is promotional. Speaking, doing podcasts, trying to keep the brand out there and keeping it top of mind. And third is expansion. 

Advice to Start-Up Agency Owners 

Erik’s advance is pretty simple when it comes to start-up agency owners.

“Either find that person, be that person or partner with that person, basically.”

Pretty straight-forward. But, if you’re planning to start an agency or expand your agency you must be genuinely passionate about it, make sure to hire the right people for the job and treat them the way you would want to be treated. 

And, always remember to take risks wisely!